Philip Morris International Inc. (NYSE:PM) Q3 2023 Earnings Call Transcript October 19, 2023 9:00 AM ET

Company Participants

James Bushnell - VP, IR, and Financial Communications

Emmanuel Babeau - Chief Financial Officer

Conference Call Participants

Vivien Azer - TD Cowen

Bonnie Herzog - Goldman Sachs

Gaurav Jain - Barclays

Pamela Kaufman - Morgan Stanley

Matthew Smith - Stifel

Owen Bennett - Jefferies

Andrei Condrea - UBS

Operator

Good day and welcome to the Philip Morris International Third Quarter 2023 Earnings Conference Call. Today's call is scheduled to last about 1 hour, including remarks by Philip Morris International Management and the question-and-answer session. [Operator Instructions] Media representatives on the call will also be invited to ask questions at the conclusion of questions from the investment community.

I will now turn the call over to Mr. James Bushnell, Vice President of Investor Relations and Financial Communications. Please go ahead, sir.

James Bushnell

Welcome. Thank you for joining us. Earlier today, we issued a press release containing detailed information on our 2023 third quarter results. The press release is available on our website at pmi.com. A glossary of terms, including the definition for smoke-free products, as well as adjustments, other calculations, and reconciliations to the most directly comparable US GAAP measures for non-GAAP financial measures cited in this presentation, and additional net revenue data are available in Exhibit 99.2 to the company's form 8-K dated October 19, 2023, and on our investor relations website.

Today's remarks contain forward-looking statements and projections of future results. I direct your attention to the forward-looking and cautionary statements disclosure in today's presentation and press release for a review of the various factors that could cause actual results to differ materially from projections or forward-looking statements.

It is now my pleasure to introduce Emmanuel Babeau, our Chief Financial Officer. Over to you, Emmanuel.

Emmanuel Babeau

Thank you, James, and welcome, everyone. We delivered very strong and better than expected performance in Q3, driven by IQOS and ZYN. Adjusted Diluted EPS grew by an excellent plus 20% in currency neutral terms to reach a record quarterly high of $1.67, despite a significant adverse currency impact in the period. Once again, our total volumes were positive, with the Q3 progression of over plus 2% positioning us to deliver our third straight year of growth.

While not yet in our organic metrics, ZYN continued its exceptional growth with US volumes up by plus 66% in Q3 and over plus 50% year-to-date with a substantial increase in category share. Importantly, our IQOS business delivered another strong quarter with HTU shipment growing plus 18%, in line with the year-to-day trend. As covered at our recent Investor Day, HTU volumes have excellent unique economics relative to cigarettes, and the plus 16.5% organic net revenue growth from smoke-free product was a key driver in both our high single digit organic top line and double digit organic operating income growth.